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ARMM Consumer Price Index (As of July 2018)

August 24, 2018 • Special Release • Ref No.: 2018-033

Survey of Retail Prices of Commodities conducted by the Philippine Statistics Authority (PSA) has generated a Consumer Price Index (CPI) of 124.5 as of July 2018, using 2012 as the base year, in ARMM. This implies that the average cost of a basket of goods and services commonly purchased by a typical Filipino household in ARMM was Php124.5 as of July 2018. This is 0.3 percent higher than that of June 2018 with CPI = 124.1.

Table 1. Monthly Consumer Price Index for All Income Households in ARMM, by Commodity Group: July and June 2018 and 2017 (2012 = 100)

Commodity Group

July 2018

July 2017

June 2018

June 2017

All Items

124.5

115.8

124.1

115.2

Food and Non-Alcoholic Beverages

131.9

121.4

132.1

120.6

Alcoholic Beverages and Tobacco

156.9

134.6

148.6

134.3

Clothing and Footwear

116.5

111.1

115.4

110.9

Housing, Water, Electricity, Gas, and Other Fuels

110.3

105.6

109.1

105.3

Furnishing, Household Equipment and Routine Maintenance of the House

117.3

110.4

116.4

110.2

Health

112.2

107

111.2

106.9

Transport

104.2

96.4

102.1

96.6

Communication

103.2

100.5

103.2

100.3

Recreation and Culture

115.7

109.7

114.6

109.5

Education

116.9

121.9

122

121.9

Restaurant and Miscellaneous Goods and Services

116.4

109.9

115

109.6

r - revised

Source of Basic Data: Philippine Statistics Authority, Survey of Retail Prices of Commodities for the Generation of CPI

Commodities under the groups of Alcoholic Beverages and Tobacco, and Food and Non-Alcoholic Beverages had the highest corresponding CPIs of 156.9 and 131.9 in July 2018, respectively. These two commodity groups have CPIs higher than the total average CPI of all items in the region.

On the other hand, Communication with CPI 103.2 recorded the lowest CPI during the same period.

Figure 1. Consumer Price Index in ARMM, All Items, by Commodity Group: as of July 2018 (2012 = 100)

Source of Basic Data: Philippine Statistics Authority, Survey of Retail Prices of Commodities for the Generation of CPI

Inflation Rate

The year-on-year headline inflation rate in ARMM is at 7.5 percent as of July 2018 (2012=100). This implies that the prices of commodities and prices in the region on the average increased by 7.5 percent compared to the same period in the previous year.

Commodity groups of Alcoholic Beverages and Tobacco, Food and Non-Alcoholic Beverages and Transport have shown the most volatile annual prices in July 2018 with the inflation rates of 16.6 percent, 8.6 percent and 8.1 percent, respectively. These three commodity groups have inflation rates higher than the total average inflation rate of all items in the region. On the other hand, the Alcoholic Beverages and Tobacco and Transport have the most rapidly changing average prices between July 2018 and June 2018 with an increase of 5.6 percent and 2.1 percent, respectively.

Source of Basic Data: Philippine Statistics Authority, Survey of Retail Prices of Commodities for the Generation of CPI

Purchasing Power of Peso

Purchasing Power of Peso (PPP) is inversely related to inflation rate. Thus, as the inflation rate increases, PPP declines. PPP in 2017 is 0.86. This implies that the Php1.0 in 2012, as the base year, values only Php 0.86 in 2017.

Figure 3. Purchasing Power of Peso in ARMM: 2012 – 2017 (2012 = 100)

Source of Basic Data: Philippine Statistics Authority, Survey of Retail Prices of Commodities for the Generation of CPI

Technical Notes

Consumer Price Index (CPI)

The CPI is an indicator of the changes in the average retail prices of a fixed basket of goods and services commonly purchased by households relative to a base year.

Uses of CPI

The CPI is most widely used in the calculation of the inflation rate and purchasing power of peso. It is a major statistical series used for economic analysis and as a monitoring indicator of government economic policy.

Computation of CPI

The computation of the CPI involves consideration of the following important points:

a. Base Period

The reference date or base period is the benchmark or reference date or period at which the index is taken as equal to 100.

b. Market Basket

A sample of the thousands of varieties of goods purchased for consumption and services availed by the households in the country selected to represent the composite price behavior of all goods and services purchased by consumers.

c. Weighting System

The weighting pattern uses the expenditures on various consumer items purchased by households as a proportion to total expenditure.

d. Formula

The formula used in computing the CPI is the weighted arithmetic mean of price relatives, the Laspeyre’s formula with a fixed base year period (2006) weights.

e. Geographic Coverage

CPI values are computed at the national, regional, and provincial levels, and for selected cities.

Inflation Rate is the rate of change of the CPI expressed in percent. Inflation is interpreted in terms of declining purchasing power of peso.

Headline Inflation refers to the rate of change in the CPI, a measure of the average standard “basket” of goods and services consumed by a typical family.

Purchasing Power of Peso shows how much the peso in the base period is worth in the current period. It is computed as the reciprocal of the CPI for the period under review multiplied by 100.